Cash management includes understanding your business's "operating cycle" (i.e. cash to cash cycle). To improve your "operating cycle" it is imperative you understand what it means, how to calculate it, and what influences it before you can improve it. Cash expectations your cash balance to be in 6 months?" Most of the time companies are fighting cash flow problems today and can't think about the future past this week. Forecasting and managing cash flow provide a real sense of control over the business. Implement a Cashboard-Dashboard, 13 week cash flow forecast and review cash flow reports at least monthly. The key for any business is to focus on cash, not just EBITDA and Net Income, as Cash is King!

2. General Financial Sophistication

• A sounding board for the owner in making key decisions, as the Trusted Advisor• Fewer cash flow surprises using a Cashboard-Dashboard and 13 week cash flow forecast• Better trained accounting staff• Better documentation and controls• Fewer surprises relating to tax payments and effective communication with the CPA for taxes• Alternative, recommendations and solutions to company problems

3. Budgeting

The ongoing process of developing, implementing and reviewing the budget and its associated variances to actual results. The CFO helps correlate the operations and financial results of the business so the management team understand the financial impact of the decisions they make.

Analyze and review monthly P&Ls and Balance Sheet and Cash Flows with the board and management team. Look at the story behind the numbers, not just the numbers. Drive toward data-driven decision making. Monitor key business metrics using a dashboard which gives you the vital statistics in the areas needed to monitor working capital. For instance, each month a report is produced showing information such as aged receivables, receivable days, inventory levels by category, inventory turnover, and days in payables. These statistics should be looked at and compared month by month to determine if the problem is getting better or worse. Trending and associated analysis and decision making is a key CFO function. Action should be taken immediately when the numbers show a trend that will be bad for the company.

Oversee the activities, work and quality of the Controller/Accountant/Bookkeeper. Working capital and treasury management. Overseeing CPA relationship, business lawyer relationship.

Working capital planning and forecasting. A simple Cashboard-Dashboard report will focus management in the right areas, and help to move the business into stronger cash performance.

Review financial reports before sending to investors or any other external party.

6. Key Ratios

Track and analyze key financial ratios against industry standard benchmarks. Put plans in place to exceed certain industry ratios, or make decisions to not meet certain ones, to meet others, and to exceed others.

7. Profitability

Gross margin analysis by product line, products or customer is critical for small businesses. Migrate towards having the internal systems provide information to manage gross margins for product lines and products.

8. Processes and Systems

Design, implement and maintain accounting processes and procedures. Processes, whether documented or not, exist in all businesses. It is the way staff perform the work necessary to produce products or services. In most small businesses, the underlying processes to accomplish the work are rarely documented or reviewed as a whole (i.e. system). Developing efficient and effective systems and processes generally reduce costs and/or improve productivity. In businesses where there is a planned exit or merger or sale of the company, documented processes are critical so the buyer gets more value from the company, and the investor/buyer does not have to these things themselves.

This goes beyond just the financial area of the company to operations, sales, marketing, technology, HR and all areas of the company. The more these process areas are fully documented, the higher the value of the company.

9. Internal Controls

Structure, work and authority flows. Theft avoidance, cash tracking, accounting processes that limit access. Internal control procedures reduce process variation, leading to more predictable outcomes. Focus is on effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations.

10. Strategic Planning

As a company grows towards an exit/liquidation event, a strategic planning process is essential. This is not as much a document, but more an ongoing process to analyze and describe the strategic goals and tactical implementation. Parts of the strategic plan include: SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, ideal customer profile, competitive analysis, short and long term action plans. The CFO guides the business through the preparation for an exit strategy in order to maximize enterprise value.

11. Corporate Credit and Collection

Establish and improve corporate credit standing. Separate personal from business credit reporting so the company's credit stands on its own following the seven steps to success in developing business credit.

12. Audits

Oversee external accounting and other audits as required.

13. Information Systems

Oversee the continued improvement of internal operations for information systems. Well documented IT systems, software and hardware asset tracking are key factors when a buyer completes IT M&A due diligence for to a company that wants to be sold.

14. Financing

Direct the business in the development of an effective capital structure by securing debt financing at attractive terms, managing the lender relationships and ensuring compliance to the debt terms.

B. Controller/Accountant/Bookkeeper Responsibilities:

1. Main Responsibilities

The main responsibilities of of the Controller/Accountant/Bookkeeper are to maintain and operate the books and records of the business. Prepare, control, balance and check various accounts using standard bookkeeping methods. Enter daily/weekly/monthly financial transactions in QuickBooks or other accounting software. Maintain general ledgers recording the status of various accounts and make sure that all the accounts balance. Prepare financial statements. Verify the accuracy of computerized accounting and record-keeping systems.

Under the guidance of the CFO, document the accounting and bookkeeping standard operating procedures manual. Help the CFO create the full accounting process documentation, review for improvements, and update the process to increase streamlined accounting/bookkeeping processes.

3. Compliance

Maintain best practices accounting and bookkeeping in compliance with General Accepted Accounting Principals (GAAP).

C. Conclusion:

There is a significant strategic and tactical difference between the value a CFO brings to the executive leadership of a business and Controller, Accountant or Bookkeeper. The key is for the CEO/business owner/entrepreneur to schedule an initial meeting with a CFO, access the business need, and determine an action plan to drive the business to the next level of sales and profit. As mentioned in the introduction, most small businesses cannot afford a full time CFO, so a part time or virtual CFO is the ideal arrangement. The key is find a CFO with experience that can be the Trusted Advisor to the CEO/business owner/entrepreneur and provide financial, operational and business insights.

Keith McAslan is a Partner with CxO To Go a national professional services company headquartered in Denver, Colorado that provides on-demand C-Level expertise and best practices to client companies on a part time, flexible, and affordable basis. Keith is sought after to provide advisory services as the Trusted Advisor to Owners and CEO's. By utilizing his extensive experience as a successful financial and operational C-level executive, Keith brings a results driven leadership style to complex situations.

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